Bank managers and executives who cause a bank to fail face up to seven years in prison and an unlimited fine. This law is effective as of today Britain which establishes very heavy penal consequences for bankers who will commit obvious errors causing the default of the credit institution.
The rule is part of the measures aimed at increasing the direct responsibility of bank executives and above all at avoiding misconduct which in the course of the 2008-2009 financial crisis dealt a severe blow to the City. One example above all: the rate fixing scandal Libor.
The new law will affect not only banks, but also mortgage companies (building societies) and investment ones but only if of systemic importance and has the purpose of accepting the recommendations coming from the Bank of England which, however, had proposed a higher prison sentence, equal to 10 years of imprisonment compared to the seven foreseen by the current legislation.
The aforementioned law also removes the burden of proof for bank managers who, in the original version, had the duty to prove that they had done everything possible to avoid bankruptcy. Instead, a "duty of responsibility" is envisaged, while the aforementioned burden of proof will be the prerogative of the regulatory authorities. “This Government has learned the lessons of the past – commented the Chancellor of the Exchequer, George Osborne, in a statement – The introduction of the new offense is the latest step in my plan to ensure that the British banking industry operates to the highest standards . It is absolutely right for a senior manager to go to jail if his actions have caused him to go bankrupt”.
